Moody's cuts Toyota rating, first time in a decade

TOKYO (Reuters) - Moody's Investors Service cut its credit rating on Toyota Motor Corp for the first time in a decade on Friday, as the world's top automaker heads for its first ever annual consolidated operating loss.

Moody's cut its top-notch Aaa senior unsecured long-term rating on Toyota by one notch to Aa1, concluding a review it started in December when it warned of a possible downgrade.

Toyota was the only Japanese company to hold Moody's top rating.

Credit ratings agencies have been lowering their ratings on automakers as sales dive in all major markets due to the slumping global economy. Japanese carmakers have also been hit by the yen's surge to a 13-year high against the dollar.

The downgrade, Moody's first on the automaker since 1998, will affect $19 billion in long-term debt.

Shares of Toyota were up 2.3 percent at 3,110 yen as of 0509 GMT, slightly outperforming the broader market.

In a statement, Moody's said the downgrade was "driven by the significantly impaired state of profitability at Toyota, due in turn to the severe nature of market conditions surrounding the global auto industry."

Toyota is set to report earnings for the October-December quarter after the close of trade on the Tokyo stock market on Friday.

Toyota is expected to widen its loss forecast for the business year to March 31 as it struggles to cut production fast enough to match a sharp drop-off in global sales.

Moody's has said it may downgrade its ratings on Honda Motor Co and Nissan Motor Co, Japan's second- and third-largest automakers.

It currently has Honda on its fourth-highest rating and Nissan on its seventh highest.

(Reporting by Nathan Layne; Editing by Hugh Lawson and Chris Gallagher)